The world is making the transition to electric vehicles. That’s the conclusion of a BloombergNEF report issued Wednesday at COP27, the global climate summit taking place in Egypt, where more than 200 governments and private-sector entities have signed on to the newly announced Accelerating to Zero Coalition.
Globally, passenger EV sales soared 110% in 2021 over the prior year, while U.S. sales more than doubled in that period. The BloombergNEF Zero-Emission Vehicles Factbook states that the “surge has continued into 2022.” The report estimates that by the end of this year, the U.S. will have 3.6 million EVs on the road, including hybrid vehicles, putting it in third place behind the China and Europe markets.
California and other states are leading the transition to electric vehicles in the U.S., according to the report. In August, California finalized regulations that would ban sales of gasoline-powered vehicles by 2035, regulations which Massachusetts and Washington will soon adopt, along with New York.
Although the U.S. does not have a national policy to phase out fossil-fueled vehicles, President Joe Biden set a target for half of all new vehicle sales to be electric by 2030. “The market is still predominantly driven by policy,” said Aleksandra O'Donovan, lead author of the BloombergNEF report, in an email.
In the U.S., the bipartisan infrastructure law and the Inflation Reduction Act have driven greater interest in EVs, the report says. The impact of the IRA alone is poised to grow EV adoption 20% larger by 2030 than previously forecasted.
“Despite the stringency of some of the rules around the EV tax credit, the fact that automakers like Tesla, or GM, who have no longer been eligible for the previous EV tax credit, will gain at least a portion of it back, is good news for the U.S. EV market,” said O'Donovan, who leads BloombergNEF’s electrified transport research team.
Automakers are rapidly shifting production lines to electric vehicles. Already, EVs exceed more than a quarter of sales in Europe for several manufacturers, including the Volkswagen Group, Hyundai/Kia and BMW. The report notes that the number of available electric vehicle models in the U.S. grew 43% from 2020 to the first half of 2022 and that these new vehicles have a longer driving range and can charge faster than earlier models.
The report also notes that sales of zero-emission commercial vehicles “are growing quickly” and that zero-emission bus sales will grow in 2022. The U.S. lags China and Europe in the number of electric buses in use, with just 2,000 on the road in the first half of 2022. North American bus manufacturers have seen a surge in orders for zero-emission transit buses but cited component shortages as holding back deliveries.
Transportation accounts for a growing amount of global CO2 emissions, with North America contributing 1.64 gigatons in 2022, according to the report.
The Accelerating to Zero Coalition aims to end sales of fossil-fueled vehicles by 2035 in leading markets and by 2040 globally, according to a press release. “Road transportation shows an encouraging trend toward e-mobility, but must urgently and drastically pick up pace to meet our global climate goals,” said Rachel Muncrief, deputy director of the International Council on Clean Transportation, in a press release.
According to the BloombergNEF report, zero-emission vehicles worldwide are expected to prevent the use of 1.7 million barrels of oil per day in 2022, nearly the estimated amount that California currently consumes each day. But more needs to be done, said O'Donovan.
“The policy and regulatory push in the major EV markets should not slow down,” she said. “More attention from the regulators needs to be put on commercial vehicles – in particular medium and heavy duty vehicles, which are the furthest from net zero trajectory. And, probably most importantly, more attention is needed on narrowing the gap between the developed and emerging EV markets, where EV adoption is still minimal.”